38!!

Hillbilly

Moderator
Jan 1, 2002
18,948
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I just changed some dollars at my place in Santiago: RD$38:1 !!! And the administration is mocking Hipolito???

Looks like the doomsayers are toeing the mark...birds coming home to roost, and all the other sayings.

HB
 
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windeguy

Platinum
Jul 10, 2004
42,211
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I was going to start a thread about what will happen when Hippo wins the next election:

- Work on the Metro stops

- Dollar goes to 50$RD

- Some other Bank is destroyed

- Interest rates skyrocket and Banco Central re-starts CDs with 20+% interest

- Plantains are once again touted as the main staple food.

- No change in the War on Drugs. Everyone likes the profits on that.

Any others?
 

Criss Colon

Platinum
Jan 2, 2002
21,843
191
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38
yahoomail.com
Windguy,thanks for writing my post,saved me some time!

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Criss Colon

Platinum
Jan 2, 2002
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I think we can beat that!
We should have a "POOL".
I think the DRpeso will be at __to__ against the USdollar,on 1 January,2013!
That will give "HIPOLITO",6 months to really "Phuck" things up,after taking office in August,2012.

All bets are OFF if a"Nuclear Device" is used anywhere in the World before then!

I say,80 to 1.

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belmont

Bronze
Oct 9, 2009
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So in reality, how strong will that make our dollars? Does inflation make up for the devaluation of the peso?
In reality, most of the economy is dollarized. As the peso is devalued to the dollar, it takes more pesos to buy it. There are some short-term advantages to the dollar increasing in strength as some things lag behind. For example in 2003, wages never kept up with the devaluation of the dollar. So if your business was paying in pesos for labor, but charging dollars for your product, you did very well.
 

Criss Colon

Platinum
Jan 2, 2002
21,843
191
0
38
yahoomail.com
"Inflation" is already here!I am more worried about "Hyper Inflation" here in the DR!
Their massive government projects,and insurmountable foreign debt are already causing the sustained devaluation of the Dominican peso.They will most likely default on their foreign loans.The IMF, World Bank,and the European Union can only "restructure" the DR's loans for so long.Rather than allow the DR to "default",they will most likely make some convoluted,"agreement",that "forgives" all,or part,of the debt to forestall the complete collaps of the economy.That is "their style"!

"Save Your Dollars!!!"

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belmont

Bronze
Oct 9, 2009
1,536
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How about last time when Hipolito bought fuel from his friend Hugo on 30 year credit. If Mr. Chavez ever forecloses, he may end up owning most of the country.
 

windeguy

Platinum
Jul 10, 2004
42,211
5,966
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So in reality, how strong will that make our dollars? Does inflation make up for the devaluation of the peso?

What I have seen happen is a ratchet effect. As others pointed out that as the peso loses value, there are things that are temporarily cheaper to get if you convert US dollars and buy at the right time.

If the peso somehow gets stronger versus the dollar, the price in pesos won't go down from the highest price. Hence the "ratchet" effect leaving prices ever higher. Inflation quickly makes up the difference on many, but not all things.
 

windeguy

Platinum
Jul 10, 2004
42,211
5,966
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Additional Hippo effects:


- Foreign Investments in the DR fall 25% year over year during his term in office.

- Robert of DR1 leaves permanently for Columbia
 
Jan 3, 2003
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If the peso devalues at a rapid rate, then construction items might be the next bargain. Instead of raising prices to compensate for the collapse in the peso, construction items especially have a logical limit to which prices can not surpass. That limit is the point where raising prices to compensate for a peso collapse prohibits the sale of construction items. As a result, the sellers would rather sell at a price that represents a loss rather than not being able to sell at all.

The reason being is that a peso collapse as experienced during Hipolito's regime could have gone to a point where the sellers would have lost it all at any price whether high or low. Unable to tell at that point in time if the peso was going to 100, sellers were desperate to gain some currency at a loss price rather than no currency at all at a very high price.

Now food items are different. In a peso collapse, food items would be demanded in earnest by the populace. The demand side or the purchasers of food items would essentially bid the price ever higher for fear that food products would soar to rates that they could not afford. In this scenario, the sellers of food items could price gouge the population without the adverse effects that occur under the previous scenario.

What about housing prices? A rapid collapse in the peso would be accompanied by a sharp decline in housing prices. It could reach a point where houses in a hyper-inflationary event would drop to levels of worthlessness. The demand for food items by the populace would exceed the demand for housing. Those that have homes would want to get out of their homes in such a massive rush to garnish food items that housing would drop dramatically. In essence, those who bought at the top of the Dominican housing bubble would lose most of their value.

Lastly, those who owe money would be rewarded because in such a rapid peso collapse, you could pay back loans with hyper-inflated cash. The speed with which the peso collapses would exceed any bank attempts to compensate with onerous rises in interest rates. If you have dollars, then the payback would be a fraction of what you initially started with. During Hipolito's term, I knew of some Dominicans that paid back many tens of millions in a dollar-peso swap that essentially dropped their loans to close to half of their value.

These scenarios presented are one of some possible alternatives in an hyper-inflationary trigger event. As in all such crisis events, timing is crucial to catch you on the winning side.

Additional Hippo effects:


- Foreign Investments in the DR fall 25% year over year during his term in office.

- Robert of DR1 leaves permanently for Columbia

In an hyper-inflationary event, no country will be spared nor will any offer solace. The interconnectedness of the main financial institutions has produced in essence one economic system. Central banks and the IMF have equalized all economies in a desire to create an economic pseudo-stability arena. Even small nations like the DR are being given the same prescriptions that are given to key nations which if they falter could lead to global crisis. I'm not saying if the DR were to fall, it would bring down the world order.

Nothing of the sort. What is happening is that when the DR falls, the rest will fall in tandem, not out of a domino effect, but the synchronicity with which economic prescriptions are given. Or other nations will fall in a domino effect and the DR being given the same remedies will fall as a result. It's what I wrote about in the correlation of all asset classes being eerily similar as to a point in time just prior to LTCM's collapse.
 
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cobraboy

Pro-Bono Demolition Hobbyist
Jul 24, 2004
40,964
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38 vs. the dollar? Look at the bigger picture: the dollar has become significantly devalued. So if the DR peso is devalued against a devalued currency, what does that tell you?
 

Ken

Platinum
Jan 1, 2002
13,884
495
83
The lesson learned from Hippo's first term in office is to stock up on everything you might need for the foreseeable future before prices start going up.

As the value of the peso against the dollar falls, there is no immediate change in prices. But then merchants must order more stock and pay a higher price. So prices go up, not only to offset the decreased value of the peso but also in anticipation of further devaluation.

Stocking up during the window of opportunity can save you a lot of money,
 

windeguy

Platinum
Jul 10, 2004
42,211
5,966
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OC is dead on correct about the construction materials pricing. The window of opportunity will be short.
 

Criss Colon

Platinum
Jan 2, 2002
21,843
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38
yahoomail.com
Chavez already owns 51% of REFRIDOM, the DR's oil refinery!
They also have some kind a "DEAL" to allow Venezuelan workers to use rooms at the nearly vacant beach resorts in Puerto Plata!
I'm sure when they arrive,PICHARDO will send us some of his "famous" picture essays depicting the "BOOMING" hotel business in the North Coast!
We used to say,in the USA,when a city fell on "HARD TIMES","Will the last person to leave Detroit,(for example) Please turn out the lights!"
You don't have to say that here,the "lights" are already out most of the time anyway!!!!

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Peterj

Bronze
Oct 7, 2002
1,461
346
83
Dominican Republic
"Inflation" is already here!I am more worried about "Hyper Inflation" here in the DR!
Their massive government projects,and insurmountable foreign debt are already causing the sustained devaluation of the Dominican peso.They will most likely default on their foreign loans.The IMF, World Bank,and the European Union can only "restructure" the DR's loans for so long.Rather than allow the DR to "default",they will most likely make some convoluted,"agreement",that "forgives" all,or part,of the debt to forestall the complete collaps of the economy.That is "their style"!

"Save Your Dollars!!!"

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You mean "Hipo Inflation" I think.
 

PICHARDO

One Dominican at a time, please!
May 15, 2003
13,280
893
113
Santiago de Los 30 Caballeros
Hippo's economic team aims to remove the RD Peso and instead dolarizar la economia Dominicana...

He said that it was too expensive to print DR money and he will rather use US currency as legal tender, to save the country from using the foreign currency reserves as collateral for new ones...

He said that this will mean better options for the poor and more stability in the monetary exchange rate, on direct foreign investments into the country. In other words HE KNOWS the dollar will go sky high and the peso sink under his administration, so he's making away with that sooner and removing that little negative from his eventual re-election campaign rapport...
 

Ken

Platinum
Jan 1, 2002
13,884
495
83
OC is dead on correct about the construction materials pricing. The window of opportunity will be short.

If we even have one. The more I think about it the stronger the feeling is that just the election of Hippo would cause prices to start rising. Merchants may want to keep ahead of the curve this time around.